Adam Curtis' The Power of Nightmares takes off where Michael Moore's Fahrenheit 9/11 ends, meaning that the films documenting the relationship between governments and terrorism are just getting better. Screened first on the BBC last year and then last month at the 58th Cannes Film Festival, The Power of Nightmares makes a strong case for how governments need the nightmare of terrorism to remain in power.

Curtis argues that governments used to offer utopian dreams for a better world but after the end of the Cold War, they were reduced to managing the economy, as there wasn't anymore a competition of ideologies. Hence, to preserve their position they need to instill fear in the masses of extreme external threats.

"Put simply, they have found a
grand dark force to protect people
against, and they can use the power
of the state to do this.
It is a mirror image of the positive
future they used to promise us.
But now it is a frightening future
they promise to protect us from."

As Curtis puts it: "It would be impossible for Lyndon Johnson to make his famous 'great society' speech today: that idea that politicians can change the world would be laughed at. Of course, there is massive social and economic progress, but it is no longer perceived as having been produced by politicians. Politicians and politics don't give meaning and purpose to our lives any longer, and this has created a crisis of legitimacy for them.

" If all they offer is a better managerial style, then why should we vote for them?… This is why I believe that politicians have found in fear, a way of restoring their legitimacy. I do not in any way think it is a conspiracy - they have simply stumbled on it. Put simply, they have found a grand dark force to protect people against, and they can use the power of the state to do this. It is a mirror image of the positive future they used to promise us. But now it is a frightening future they promise to protect us from."

Eqyptian educator Said Qutb

From there, Curtis builds his film's argument, that the rise of Eastern extremism in the form of Muslim fundamentalism is balanced by the equally rabid Western extremism in the form of neo-conservatism. Both strands emerged after World War II. When Egyptian school inspector and social theorist Said Qutb visited the US in 1949, he was appalled by the selfish individualism and decadence that he saw. He resolved that such a future must never take root in the Muslim world. Qutb's disciples included Ayman Zawahari, who later became Osama Bin Laden's mentor.

Meanwhile at the same time, American philosopher Leo Strauss was teaching University of Chicago students that progressive liberalism would seed its own destruction. Strauss' pupils included Paul Wolfowitz, the former Deputy Defence Secretary (one of the architects of the War on Iraq) who is now the head of the World Bank.

Like the Islamic fundamentalists who turned to terror to force people to see the truth (of a need for a strict moral framework for modern society), the neo-conservatives believed that America had a destiny to battle evil in the world. In short, both groups believed in using force.

Curtis details how Al-Qaeda was
a figment of American imagination
when the US Justice Department
created the term to prove
the existence of a terrorist network
in order that they could try Bin Laden
in absentia in early 2001,
for the Kenyan bombings in 1998.

In the second part, Curtis shows how the neo-conservatives built up the power of the Muslim fundamentalist counterparts by providing arms and training (for example, techniques of car bombs) during the Russian occupation of Afghanistan. Here, you can see archival footage of Defence Secretary Donald Rumsfeld in 1976. Yes, all these guys were building their power base way back then.

In the final part, Curtis details how Al-Qaeda was a figment of American imagination when the US Justice Department created the term to prove the existence of a terrorist network in order that they could try Bin Laden in absentia in early 2001, for the Kenyan bombings in 1998.

There is also priceless footage of Rumsfeld looking solemn during a 2001 news report detailing the high-tech Al-Qaeda headquarters in the Tora Bora mountains of Afghanistan. The British and US forces later found a bunch of dusty holes with rusty ammunition and animal droppings. Neither did they find weapons of mass destruction in Iraq.

Curtis has been one of the BBC's leading documentarists with titles such as The Mayfair Set, which looked at how capitalists were allowed to shape the Thatcher years and The Century of the Self, which connected Freud and the power of Western consumerism. Before that, Curtis was teaching politics at Oxford.

The Power of Nightmares is destined to be one of the essential films of this era and because it is so clear sighted, it will be dismissed by many in the media. In a similar fashion, Emile de Antonio, one of the great American political documentarists was summarily dismissed in the Halliwell's Filmgoer's Companion as an "experimental documentarist with a pink tendency." Yet de Antonio's Year of the Pig (1969) predicted why the Americans would lose the Vietnam War (because the Vietnamese were fighting a war of independence and not a war for communist ideology), but the film is largely forgotten now. However, its influence is unmistakeable. The film's poster image was the album cover of The Smiths' Meat Is Murder (1985).

The Power of Nightmares leaves us with two lingering thoughts. As Curtis said: "The reality of Islamist terrorism is that it is disparate and complex, driven by an idea and not by an organisation." He also points out: "The reality is that there are many new elites in business, science and the media who are creating the new progressive visions, and the age of politics as a system that gave meaning and vision to society may be dying."